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Selling Shares – Tips on Getting the Best Price Possible

admin — Mon, 10 Aug 2009 21:14:52 +0000

When selling shares, the investor should always look to obtain the best price possible. This appears self-evident, but it is surprising how many investors allow other considerations to affect their judgement, and end up selling for a worse price than they could have obtained, or even worse hang on to their shares long after the optimum time to sell, tying up their capital when it could be used more effectively elsewhere. It is important to note that getting the best price does not always mean making a profit: though of course the provision of income is the primary reason for investing in stocks and shares, it is essential that profitability is considered with respect to a portfolio of investments rather than individual stocks. It is possible that to make a profit across the share portfolio it may be necessary to dispose of an individual stock at a loss. Despite this, it is of course desirable to make a profit on individual share deals, and there are a number of ways to achieve the best price possible.

Perhaps the most important factor is for the investor to ensure that he or she has an intimate knowledge of the company in which the shares are being traded. Selling shares in a company without information on its products or services, financial performance, research programs and other related areas can be compared to a person crossing a busy road with their eyes closed: they may get to the other side unscathed, but it will be a matter of pure luck and a bad outcome is the more likely result. There are a number of questions to consider when assessing the best time to sell:

Is the company due to announce better or worse than expected financial results?
Is a new product or service about to be brought to the market that could increase profitability, or has too much money been invested in a product that will not gain sufficient market share?
Is the company expanding and hiring new staff, or is it undergoing a period of retrenchment in employee terms?
How does the board of directors regard the future of the company?
If they are positive, are their positive words backed up by personal investment in the company?
Are the directors selling their shares?

All of these questions and many others should be researched before deciding when to sell.

Aside from issues surrounding the company itself, there are a number of external factors that must be considered when selling shares. How is the share performing in relation to the wider market? Have other shares, for instance, recently started to rise while it has not? Is any national or international event imminent which may have an effect on share prices, either the one being sold or share prices in general? An obvious example here is that it would have been much better to have sold banking shares before the recent financial crisis erupted. While it seems no-one suspected the full extent of the crisis, many investors unloaded their banking shares due to their opinion on the unsustainable business models of the banks, and avoided heavy losses as a result.

Share Trading Facts:

These points give a cue to traders as to where prices will head for the day, prompting each trader where to enter his trade, and where to exit.

Beyond these costs are the opportunity costs of money and time, currency risk, financial risk, and internet, data and news agency services and electricity consumption expenses – all of which must be accounted for.

Although many companies offer courses in stock picking, and numerous experts report success through Technical Analysis and Fundamental Analysis, many economists and academics state that because of the efficient-market hypothesis it is unlikely that any amount of analysis can help an investor make any gains above the share market itself.

Updates in Share Trading:Online share trading can be a tangled web – Courier Mail

admin — Mon, 10 Aug 2009 13:49:09 +0000

Online share trading can be a tangled web
Courier Mail
Witness the online share trading disasters that occurred in the past year when inexperienced investors bought shares in Queensland toll road firm …

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Updates in Stock Trading:Citigroup Takes US Stock Trading to New Levels: Chart of Day – Bloomberg

admin — Mon, 10 Aug 2009 13:49:09 +0000

Citigroup Takes US Stock Trading to New Levels: Chart of Day
Bloomberg
Aug. 6 (Bloomberg) — Citigroup Inc., propped up by government aid after descending into the ranks of corporate basket cases, is rewriting …

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Updates in Stock Trading:Yanzhou Coal Mining shares suspended -HKEx – Reuters

admin — Mon, 10 Aug 2009 13:23:39 +0000

Yanzhou Coal Mining shares suspended -HKEx
Reuters
Share trading in Australian coal miner Felix Resources Ltd (FLX.AX) was also suspended on Monday ahead of an announcement on the outcome of talks on a …

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Latest in Share Trading:Shanghai acting like it's 2007 again, analysts say – MarketWatch

admin — Mon, 10 Aug 2009 13:23:39 +0000

Shanghai acting like it's 2007 again, analysts say
MarketWatch
Specifically the broker pointed to an economy glutted with excess liquidity, a surge in openings in stock-trading accounts, and a turnover-to-market-cap …

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Handy Stock Trading Clip:Swing Trading Lesson 5-12-2008 – www.TheStockBandit.com

admin — Mon, 10 Aug 2009 12:46:31 +0000

Duration: 00:02:49
View: 787

Today's swing trading lesson from www.TheStockBandit.com is on monitoring price action beneath resistance. Swing trading, day trading, stock market, stock trading lessons from http ... swing trading d (more)

Latest in Share Trading:AWB halts share trading – ABC Online

admin — Mon, 10 Aug 2009 12:40:46 +0000

AWB halts share trading
ABC Online
Agribusiness company AWB has temporarily halted trading in its shares, pending an announcement to the Australian Securities Exchange about its operations in …

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Latest in Share Trading:Stock Trading Slowdown Is Steepest in Two Decades: Chart of Day – Bloomberg

admin — Mon, 10 Aug 2009 12:40:46 +0000

Stock Trading Slowdown Is Steepest in Two Decades: Chart of Day
Bloomberg
July 24 (Bloomberg) — Stock trading in the US hasn't slowed this much midyear in at least two decades, causing some investors to worry …

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Time to Revisit Portfolio Risk Management

admin — Mon, 10 Aug 2009 08:47:25 +0000

In 2007, I wrote about the importance of managing risk within your investment portfolio. When considering what investors have gone through over the past 18 months it seems appropriate to revisit risk management as a component of a sound portfolio. While I have always been a student of “what can go wrong with an investment,’ in my dealings with investors, this question is often an overlooked consideration.

Candidly, I blame my industry for this as we have propagated the commonly held beliefs that you should “be in it for the long haul” and that the markets simply go up over time. While the former statement is true in the sense that monies you commit to the capital markets should be long-term in nature due to the inherent volatility of markets and the latter statement is historically true in that the markets have gone up over time (although this is not guaranteed to continue in the future), it is worth considering how to protect your portfolio when things go wrong.

In my previous column I suggested that, at the core, markets are driven by supply and demand. This is to say, when there are more buyers than there are sellers, the price of stocks will go up. Conversely, when there are more sellers than there are buyers, the price will go down. At its root, the market is driven by Economics 101: supply and demand. If you can subscribe to this premise, then it suddenly begins to make sense why it’s possible to own a company that has a strong balance sheet, good earnings, high profit margins and a defendable product niche, yet the stock goes down in value.

On the surface, from an intellectual standpoint, it simply makes no sense for a good company to go down in price. We’ve all found ourselves asking the question, “this is a good company and their earnings are great, why is the stock going down?” The answer is simple, you may own a great company, yet at the current point in time you also own a bad (losing) stock. Again, if a good company goes down in price then you can conclude that there are more sellers than there are buyers. It’s really that simple. Granted, there may be a multitude of reasons unrelated to the company that is causing people to sell the stock, however, the bottom line remains that there are more sellers than there are buyers. Thus, the stock declines in price.

So the million dollar question becomes how can an investor determine whether there are more buyers than there are sellers? While some investors rely on one or two supply/demand indicators, we all recognize that no indicator by itself is correct 100% of the time. With this in mind, it may make sense to create a series of indicators from multiple disciplines in order to attempt to determine which direction Wall Street is leaning at any given point in time. There are numerous disciplines – which are considered technical analysis tools – from which to analyze the current supply/demand dynamics in the capital markets. Further, some disciplines are more suited for an intermediate term market posture while others are best suited for a shorter-term stance. With respect to short-term indicators, they may be useful in determining entry and exit points on any given stock or pooled stock investment. The following is a list of some of the more popular technical indicators:

A. Bar Charts.
B. Point and Figure (PNF) – in particular of the New York Stock Exchange Bullish Percent Index.
C. Stochastics.
D. Moving Averages – simple and exponential moving averages.
E. Bollinger Bands.
F. Moving Average Convergence Divergence – commonly referred to as MACD or “Mac D”.
G. Trendlines.
H. Relative Strength.

For a detailed description of these indicators simply search the Internet by the indicator’s name or visit your local library.

No matter what form(s) of analysis you subscribe to your goal should be to find a methodology that provides a logical and organized way of recording the supply/demand relationship of any stock or pooled stock investment you own. Bear in mind, no methodology is the Holy Grail nor does any discipline offer a perfect Crystal Ball. However, what you can seek to achieve is a process by which you can potentially increase your odds of success and develop a discipline by which you can act upon when things go wrong – managing risk – with any particular investment you own. For as sure as day follows night, at some point things will go wrong (witness the Fall of 2008!) May I also suggest that if you currently work with an adviser (financial adviser, broker, insurance agent) that you inquire with them to determine what their discipline is with respect to managing risk.

As we enter the second half of 2009 now would be an excellent time to consider using some of the aforementioned indicators as well as reevaluating your investment game plan. Toward the goal of assisting you in developing a game plan, you might consider using mine as your template:

- Step 1: Market Analysis – is the market conducive to growth of my capital?
- Step 2: Sector Analysis – determine which sectors of the market are conducive to growth.
- Step 3: Fundamental Research – review the fundamentals of any investment you are considering to answer the question of “what to buy.”
- Step 4: Technical Research (Indicators) – using fundamentally sound investments (Step 3) utilize your indicators to determine “when you should buy.”
- Step 5: Risk Management and Follow-up – constantly monitor your portfolio. Have a plan for when things go right and most importantly, have a plan if things go wrong.

As we know, nothing in the capital markets is ever certain – especially in the current environment – so it is critical that you and/or your adviser have an investment game plan that is well thought out and continually monitored. Good investing!

Share Trading Facts:

There is criticism on the validity of using these technical indicators in analysis, and many professional stock traders do not use them.

Depending on the nature of each national or state legislation involved, a large array of fiscal obligations must be respected, and taxes are charged by jurisdictions over those transactions, dividends and capital gains that fall within their scope.

In a normal distribution of investors, many academics believe that the richest are simply outliers in such a distribution.

Updates in Stock Trading:Asian Stocks Gain on US Jobs, Japan Machinery Orders; Bridgestone … – Bloomberg

admin — Mon, 10 Aug 2009 07:25:55 +0000

Asian Stocks Gain on US Jobs, Japan Machinery Orders; Bridgestone …
Bloomberg
The Japanese currency depreciated to as much as 97.78 from about 95.43 at the 3 pm close of Tokyo stock trading on Aug. 7. “The improvement in the US job …